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2017 (4) TMI 623 - ITAT COCHINTP adjustment using the CUP method - Held that:- As both assessee as well as the revenue agree that AFDC and ICF, USA are associated enterprises, the transaction between them cannot be considered as comparable uncontrolled transaction in terms of Rule 10B of the IT Rules. As per Rule 10A(ab), uncontrolled transaction means a transaction between enterprises other than associated enterprises, whether resident or non-resident. In the present case, it is an agreed fact that both AFDC and ICF, USA are associated enterprises. Thus, transactions between them cannot be considered as the uncontrolled transaction. Consequently, the entire basis of TP adjustment is incorrect and bad in law. The TP adjustment using the CUP method is accordingly deleted. However, the tribunal being the final fact finding authority, has to necessarily examine whether the international transaction entered by the assessee with its AE is at Arms Length using the other methodology prescribed under Rule 10B of the IT Rules. Moreover, the assessee has filed additional ground of appeal regarding computation of ALP under TNMM, hence, we remit this issue to the file of TPO for computation of ALP of international transactions as per TNMM and in accordance with law.
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